On September 21, two days after the coup which toppled the Thaksin Shinawatra government, UOBKayHian issued a report stating that the coup would have a negligible impact on Singapore.

"There will be some near-term market reaction to this latest incident in Thailand, but we expect this to be a very short-term setback and a return to normalcy fairly quickly," it said.

"While there may be some knee-jerk reaction in the Thai market when it opens, we expect any impact on Singapore to be very short term and there could be a window for traders if it falls very hard."

UOBKayHian's assessment of the risks is that things are rather sound because foreign investors have been net buyers of Thai equities.

Singapore's investment exposure in Thailand includes electronics, banks and property. The biggest chunk is Temasek Holdings' takeover of Shin Corp for US$1.9 billion (Bt71.3 billion).

Temasek is feeling uneasy about the Thai authorities' investigation into whether it has relied on alleged nominees, such as Kularb Kaew Co, in its acquisition of Shin.

Jimmy Phoon, Temasek's managing director for strategic development, told Newsweek recently that Temasek had broken no Thai laws and that it was ready to work with the Thai authorities. "Kularb Kaew was not a proxy for Temasek," he said.

"Our investment strategy in Thailand remains unchanged. We continue to believe in the long-term fundamentals of the economy, and Thailand fits in very well with our overall investment theme of investing in rising Asian economies and tapping opportunities created by a growing middle class. We see no reason why we should change our investment strategy there," said Phoon.

Two stocks with big exposure in Thailand are two Thai-based Singapore-listed companies: Thai Beverage and DTAC (Total Access Communication).

"We believe the coup will be a passing problem and is unlikely to have a prolonged setback given what seems to be a peaceful transition," said UOBKayHian.

A research analyst in Singapore told The Nation last week that there was a lot of uncertainty at the moment for all categories of investor.

"There is no interim PM. It is not clear when the election will be held. Is Thaksin really just gone or is he/his supporters plotting something?" he said. "One major fear is that the military, while well-intentioned now, will be tempted to stay on for a longer period and that creates a backlash. Also, not clear is if the new government will pander to anti-foreigner sentiments and anti-big business views such as the furore over large retail shops.

"But despite the uncertainty, there is little real concern among the FDI [foreign direct investment] type of investors here. Singapore investors are a practical lot and are not great fans of democracy! The general view is that Thailand will probably stabilise and that long-term FDI type investment will not be a problem," he added.

For portfolio investors, there is a view that if the market falls a lot, that creates a buying opportunity. But currently, Thailand, while relatively cheap, is not necessarily a screaming buy, he said.

Thanong Khanthong

The Nation